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  • Perspective
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Nested barriers to low-carbon infrastructure investment

Nature Climate Change volume 6, pages 1065–1071 (2016)Cite this article

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Abstract

Low-carbon, 'green' economic growth is necessary to simultaneously improve human welfare and avoid the worst impacts of climate change and environmental degradation. Infrastructure choices underpin both the growth and the carbon intensity of the economy. This Perspective explores the barriers to investing in low-carbon infrastructure and some of the policy levers available to overcome them. The barriers to decarbonizing infrastructure 'nest' within a set of barriers to infrastructure development more generally that cause spending on infrastructure—low-carbon or not—to fall more than 70% short of optimal levels. Developing countries face additional barriers such as currency and political risks that increase the investment gap. Low-carbon alternatives face further barriers, such as commercialization risk and financial and public institutions designed for different investment needs. While the broader barriers to infrastructure investment are discussed in other streams of literature, they are often disregarded in literature on renewable energy diffusion or climate finance, which tends to focus narrowly on the project costs of low- versus high-carbon options. We discuss how to overcome the barriers specific to low-carbon infrastructure within the context of the broader infrastructure gap.

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Figure 1: The capital requirements of a high- and low-carbon scenario.
Figure 2: Scale of low-carbon infrastructure investment needs, 2015–2030 (US$ trillion year−1).
Figure 3: Venn diagram showing the nested barriers to infrastructure development.
Figure 4: Green bonds and YieldCos unlock institutional investment in low-carbon infrastructure.

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Acknowledgements

An earlier draft of this paper was written by the authors for an internal strategy meeting of the Global Green Growth Institute (GGGI). We would like to acknowledge GGGI's support for the project, as well as the support provided by our colleagues at the Overseas Development Institute.

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Authors and Affiliations

  1. Overseas Development Institute, 203 Blackfriars Road, London, SE1 8NJ, UK

    Ilmi Granoff, J. Ryan Hogarth & Alan Miller

  2. ClimateWorks Foundation, 235 Montgomery Street, Suite 1300, San Francisco, 94104, California, USA

    Ilmi Granoff

  3. Climate Change, Oxford Policy Management, 52 Cornmarket Street, Oxford, OX1 3HJ, UK

    J. Ryan Hogarth

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  1. Ilmi Granoff
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  2. J. Ryan Hogarth
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  3. Alan Miller
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Contributions

I.G. conceived the project in consultation with GGGI. I.G., J.R.H. and A.M. jointly conducted the analysis and wrote the paper.

Corresponding authors

Correspondence to Ilmi Granoff or J. Ryan Hogarth.

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The authors declare no competing financial interests.

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Granoff, I., Hogarth, J. & Miller, A. Nested barriers to low-carbon infrastructure investment. Nature Clim Change 6, 1065–1071 (2016). https://doi.org/10.1038/nclimate3142

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